Federal Judge Rules Disputed Facts Mean Fort Collins Dispute with Broadband Vendor Need to be Settled at Trial

Colorado federal Judge Charlotte Sweeney ruled the bulk of arguments in a dispute between the city of Fort Collins and a contractor hired to create municipal broadband internet couldn’t be settled through summary judgment. 

In a May 22 order, Sweeney denied all requests for summary judgment from Open International and most of the requests from Fort Collins in a dispute stemming from a contract between the two. 

Fort Collins voters in 2017 passed a ballot measure that paved the way to creating a municipal option for broadband internet services that became available to consumers in 2019. In August 2018, the city selected Florida-based service provider tech company Open International to implement the service after a request for proposal process. 

The contract included provisions for documenting a change for the initial scope of work, limiting liability, laying out costs to be incurred by each party if the other terminated the contract for default and defining how communications about the contract should be made. 

For the first year of the contract, Open executed four of the project’s milestones and the parties negotiated and agreed to numerous project change requests over additional costs and timeline extensions. But in the fall of 2019, the parties rescheduled the remaining milestones and negotiated responsibility for the additional delays and costs, with each side pointing to problems with the other they believed were responsible for the delays. 

In June 2020, the parties amended the contract to extend one of the milestones and split the share of an extra $3 million connected to the extension. The city would take on 55% of the extra costs and Open the remaining 45%. The amendment also laid out three new milestones for the work, two of which were invoiced and paid by July 2020. 

But in December 2020, the city paused implementation of broadband to address lingering functionality issues and executed an agreement that it would provide Open a list to prioritize, develop a new project plan with Open and make one payment when signing the agreement then another after the issues were fixed. 

Open served the city with a notice of default in May 2021 stating it had not received the list of prioritized issues and Fort Collins hadn’t devoted enough resources towards the project as required by the contract’s scope of work. In turn, the city sent Open a notice of dispute and termination and claimed the company misrepresented its capabilities in its products and implementation process and that Open also underestimated the time needed to complete services, missed deadlines and didn’t provide enough contractual support. Fort Collins’ notice added it believed trying to fix any of these issues was futile and demanded Open keep providing broadband support until a new contractor could be retained, pay the city a lump sum of money, forfeit its $1 million of retainer payments and sign a mutual release and non-disparagement agreement. 

The city sued Open in July 2021 for breach of contract, fraudulent inducement, breach of implied covenant of good faith and fair dealing and negligent misrepresentation and requested declaratory judgment. At that point, Fort Collins had paid Open $8.7 million on top of the retainer payment. Open countersued and also requested declaratory judgment on claims of breach of contract and breach of the implied covenant of good faith with damages of $3.8 million.  

But last week, Sweeney declined to rule on the majority of both side’s claims, noting a number of disputed facts around the contract and the timeline of events leading up to the lawsuit. In her order, Sweeney noted that a jury would have to decide the vast majority of issues, including damages sought by both sides. 

The case is scheduled for trial in October. 

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